The Anna Maria Island Sun Newspaper

Vol. 15 No. 44 - September 2, 2015

BUSINESS

Anna Maria Island Sun News Story

Important birthdays over 50

Investment Corner

Most children stop being “and-a-half” somewhere around age 12. Kids like to add and-a-half to make sure everyone knows they’re closer to the next age than the last. When you are older, and-a-half birthdays start making a comeback. In fact, starting at age 50, several birthdays and half-birthdays are critical to understand because they have implications regarding your retirement income.

Age 50

At age 50, workers in certain qualified retirement plans are able to begin making annual catch-up contributions in addition to their normal contributions. Those who participate in 401(k), 403(b), and 457 plans can contribute an additional $6,000 per year in 2015. Those who participate in Simple IRA or Simple 401(k) plans can make a catch-up contribution of up to $3,000 in 2015. And those who participate in traditional IRAs can set aside an additional $1,000 a year.

Age 59½

At age 59½, workers are able to start making withdrawals from qualified retirement plans without incurring a 10 percent federal income-tax penalty. This applies to workers who have contributed to IRAs and employer-sponsored plans, such as 401(k), 403(b), and 457 plans. Keep in mind that distributions from traditional IRAs, 401(k) plans and other employer-sponsored retirement plans are taxed as ordinary income.

Age 62

At age 62 workers are first able to draw Social Security retirement benefits. However, if a person continues to work, those benefits will be reduced. The Social Security Administration will deduct $1 in benefits for each $2 an individual earns above an annual limit. In 2015, the income limit is $15,720 (up from $15,480 in 2014).

Age 65

At age 65, individuals can qualify for Medicare. The Social Security Administration recommends applying three months before reaching age 65. It’s important to note that if you are already receiving Social Security benefits, you will automatically be enrolled in Medicare Part A (hospitalization) and Part B (medical insurance) without an additional application.

Age 65 to 67

Between ages 65 and 67, individuals become eligible to receive 100 percent of their Social Security benefit. The age varies, depending on birth year. Individuals born in 1955, for example, become eligible to receive 100 percent of their benefits when they reach age 66 years and 2 months. Those born in 1960 or later need to reach age 67 before they’ll become eligible to receive full benefits. It is important to note that Social Security benefits continue to increase up to 120 percent of the normal full benefit at 70 for those willing and able to wait to collect.

Age 70½

At age 70½, participants must begin taking required minimum distributions (RMDs) from traditional IRAs and qualified retirement plans, such as 401(k), 403(b), and 457 plans. RMDs are based on your account balance and life expectancy as determined by using the IRS approved tables

Understanding key birthdays may help you better prepare for certain retirement income and benefits. But perhaps more importantly, knowing key birthdays can help you avoid penalties that may be imposed if you miss the date.

Tom Breiter is president of Breiter Capital Management, Inc., an Anna Maria based investment advisor. He can be reached at 778-1900. Some of the investment concepts highlighted in this column may carry the risk of loss of principal, and investors should determine appropriateness for their personal situation before investing. Visit www.breitercapital.com.

 


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